While the government has announced stimulus packages for various sectors, some businesses that were viable before the pandemic have not got fiscal support. “We are in intense engagement with the RBI for a one-time restructuring of debt and finances for businesses,” Union finance minister Nirmala Sitharaman said. The process to ascertain the characteristics of stress, whether they are Stress 1or Stress 2 or NPA, is under way, she said. The idea is to help businesses to exit the situation honourably, she said.
At the macro level, the Financial Stability Development Council (FSDC) does stress tests based on three assumptions — baseline, medium and severe stress. Last month, in an interview to TOI, SBI chairman Rajnish Kumar had said that he expects the stress in the economy to be between the baseline and medium level. Although businesses are saved from a default tag until end August 2020, on the back of the moratorium allowed by the RBI, banks have been doing a stress test on individual accounts to determine how they will perform once the moratorium is lifted.
The finance minister was responding to a query raised by the CEO of City Union Bank, N Kamakodi, during a Chennai International Centre webinar on small businesses. “We request you to consider a business-restructuring programme for those that were viable pre-Covid but have struggled since,” he said.
The finance minister was dismayed at the slow transmission of rate cut benefits to borrowers. “The ministry of finance is intensely engaged with the RBI as to why the pace of transmission is not as speedy as it should be. Banks are citing their FD portfolios and MCLR rates. Customers must not be denied the benefits of lower interest rates,” she said.
Responding to another query on private banks not coming forward for lending to MSMEs under the credit guarantee scheme, she said so far 16 private banks have been onboarded by the government. “PSU banks have lent Rs 22,197 crore so far, while private banks have disbursed Rs 10,697 crore. Private banks must do more,” she said, especially when they were aggressively lending to SMEs.
The minister also said that she would work out a scheme with banks where Mudra loans would be issued to those without a PAN Card.